Grendene (GRND3) Q2 2024 earnings summary

Executive summary

• Net revenue for 2Q24 rose 3.6% year-over-year to R$480.3 million, with gross margin improving to 42.6% (+1.7 pp), recurring EBIT up 47.6% to R$42.4 million, but recurring net profit fell 27.1% to R$61.7 million due to lower financial results and tax impacts.

• Export volume grew 16.3%, with revenue up 12.4%, outperforming the sector and increasing market share, while domestic volume declined 3.1%.

• Melissa brand achieved 9.4% revenue growth and 11.6% volume growth, with strong omnichannel and e-commerce performance.

• E-commerce sales surged, with GMV up 37.6% and online channel EBIT up 904.5% year-over-year; gross margin reached 69.3%.

• Strong cash generation continued, with net cash position at R$1.5 billion as of June 30, 2024, up 44.5% year-over-year.

Financial highlights

• Gross revenue for 2Q24 was R$604.4 million (+3.1% YoY); 1H24 gross revenue reached R$1.27 billion (+1.8% YoY).

• Gross profit in 2Q24 was R$204.7 million (+8.0% YoY), with recurring EBITDA at R$62.9 million (+18.5% YoY) and recurring EBITDA margin at 13.1%.

• Recurring EBIT margin improved to 8.8% (+2.6 pp YoY); recurring net margin was 12.9% (-5.4 pp YoY).

• Net financial revenue dropped 56.0% to R$31.8 million in 2Q24, mainly due to FX variations and lower CDI rates.

• Dividend payout for 1H24 totals R$89.0 million, with R$13.2 million to be paid in September 2024.

Outlook and guidance

• Management expects gradual improvement in macroeconomic indicators, with potential for consumption recovery in the coming months.

• The company remains focused on cost and expense control and sees opportunities for further margin expansion.

• No extraordinary events are expected to alter strong cash generation in the second half.

• Board approved a share repurchase program, to be executed if deemed appropriate.